Rice exporters seem to be in deep trouble, as the latest PBS numbers spell out disaster; for the eight months ended FY17, Pakistan’s total rice exports are down 11 percent year-on-year to $2.41 billion. It is pertinent to mention here that rice is Pakistan’s second-largest export earner, after textile.
For 8MFY17, Basmati exports are down 13 percent in quantity and a whopping 17 percent in value. As for non-Basmati, exports are down 11 percent year-on-year in terms of volume, and 14 percent in dollar terms.
This column has highlighted the falling Basmati exports numerous times in the past (Read: “Low price weighing down rice,†published June 22, 2016). However, now it’s the non-Basmati variety that has become a cause of concern. This decline is a relatively recent phenomenon, as Pakistan had been doing exceptionally well to capture markets for its cheaper, non-Basmati varieties of rice in FY16. Indeed, the once booming non-Basmati varieties are now suffering the same fate as their premium counterpart.
A well-placed source from REAP told BR Research that the main reason for the decline has been a higher price; local stockists/middlemen have been hoarding rice and shoring up the price. Now Pakistani rice is around $25-30 more expensive than Thailand or Vietnam.
Furthermore, there has been a drop in the quality of this rice as well; where previously the non-Basmati rice was 35-40 percent broken, it is now around 50 percent broken.
One ray of hope is that banking channels with Iran are finally opening up and Basmati is showing some signs of improvement. For the month of February, Basmati exports inched up by 25 percent over last year. The source added that Basmati rice is now getting a better price and the reopening of Iran could bring much-needed reprieve for the industry.
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